The long-awaited spin-off of PayPal Holdings Inc PYPL by eBay Inc EBAY finally took place at the end of last week. Now that PayPal is its own entity, the company can take its rightful place among the tech giants of the market.
Unlocking Value
Many eBay shareholders have been anticipating the PayPal spin-off ever since it was announced back in September of 2014. The market applauded the decision to unlock the full value of PayPal by driving up eBay’s share price following the announcement.
Valuation
When shares of PayPal started trading on the Nasdaq on Monday, the company’s market cap confirmed the suspicions of many market analysts: PayPal’s business is worth more than eBay’s core business. PayPal’s new market cap of around $50 billion eclipses eBay’s core market cap of under $34 billion.
The writing appeared to be on the wall back in Q1, when eBay’s revenue from its payments division, which had grown 14 percent year-over-year to $2.11 billion, eclipsed the $2.07 billion in revenue from its marketplace division for the first time ever.
What’s Next For eBay?
While PayPal shareholders rejoice over the successful spin-off, eBay shareholders are left to wonder where eBay’s core business will look to find growth. The company’s marketplace division booked a year-over-year decline in revenue for the first time ever in Q1.
PayPal’s Place
eBay shareholders may be pondering the future, but PayPal has now taken its proper place among the tech giants of the world. The Statista graphic below shows how PayPal stacks up to other public tech companies, such as Apple Inc. AAPL, Google Inc GOOGGOOGL, Facebook Inc FB and Netflix Inc NFLX.
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